When Is the Right Time to Refinance Your Home’s Mortgage?

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If you have a home mortgage with payments that challenge your monthly budget, you might be wondering whether to refinance your home loan. Although you could technically apply anytime, the following factors may be helpful indicators that it is the best time to consider refinancing your home.

Budget Changes

You may have had an affordable mortgage payment that worked fine with your budget until a major change occurred. Maybe you lost your job or had to add a monthly car payment. A new baby or mounting medical bills for a chronic illness may be taking a bite out of your budget. Increased expenses can break your budget, and a house payment is typically a person’s biggest outlay. It is also one of the most important expenses to meet each month.

Long-Range Goals

Planning for your teenager’s college tuition or planning for retirement could see your expenses escalate as you pay off bills and prepare for future costs. Looking ahead, it might be time to reduce your monthly mortgage payment by refinancing with a home loan that is more financially advantageous.

Economic Incentives

If the economy soars, interest rates may adjust to encourage you to apply for a new home mortgage loan. Low interest rates can save you money upfront and over the life of the loan by reducing the monthly mortgage payment and applying more of it to the principal balance of the loan. Lower payments will ease a tight budget, and paying more on the principal will reduce the total interest that you will end up paying for the home loan. Some refinance loans offer to delay the first payment. Other incentives often include a quarter point lower interest, low or no loan maintenance fees, and no application or appraisal fee.

Refinance Advantages

A home refinance offers several potential benefits. More affordable loan payments may reduce your risk of making late payments or missing occasional payments. Your credit score may improve as you more quickly pay down your home mortgage loan. If you apply for a home equity line of credit on your house, you will probably get an even lower interest rate along with a credit line that meshes with the current equity in your home. If it has been a while since you opened a new credit account or applied for a loan, your credit score may improve with positive new activity.

The benefits of refinancing your home might be worth applying for if the above points are relevant to your situation. Discuss your mortgage options with a financial institution that offers good refinance terms.


Anita Ginsberg is a freelance writer from Denver, CO. She studied at Colorado State University, and now writes articles about health, business, and family. A mother of two wonderful children, she loves traveling with her family whenever she isn’t writing. You can find her on Twitter @anitaginsburg


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